Landlord Law Essentials

Landlord Law Essentials Part 4 - Choosing and checking tenants

In this part, we are going to be talking about a very important subject –

Choosing tenants

Surveys and studies have shown that many landlords do no proper checking of tenants and just take the first person who comes along.

Speaking as someone who has been called in many times to evict a tenant where things have gone wrong, I would definitely say that this is NOT the way to do it!

It is essential that tenants are properly checked and referenced. You may be a very good judge of character, but con men are professionals and appearing respectable and credit-worthy is their job.

Most experienced landlords would probably agree that choosing is a good tenant is the number one most important thing to do as a landlord!

This is what you need to do:

Take full details from the tenants.

The best way to do this is to use a tenant’s information form. This can be used to take details such as their name, address and previous addresses, employers’ details, next of kin, vehicles etc.

You also need to check their ID – and make sure they are who they say they are. Remember that criminals often target rented property to use for criminal activities. Often, properties are converted to cannabis farms, with considerable damage being done to the property in the process. So it pays to take care!

You should also ask for their last three months’ bank statements, just to check that they can actually afford to live in your property.

Many tenants will consider this to be an invasion of their privacy. If they take this attitude, tell them that they don’t have to provide any bank statements, it is up to them. But you will only be considering them as tenants if the statements are provided. They have the right to refuse to provide the statements, but then you have the right to choose who you take on as a tenant.

Take references

These should include:

Employer – probably the most important as their salary will be paying your rent!
Bank – more to check that they actually have an account, as bank references rarely give much away
Former landlord – remember that if they are a bad tenant, their current landlord may be desperate to get rid of them, so try to speak to an earlier landlord, too
Personal – but don’t rely on this too much as the person will probably be primed to give a good report. Although, if the referee is someone you can trust, it can be a good indicator.

When taking references, and indeed all the information provided to you, you need to take the attitude that everything is false until proven correct.

So, make sure that the employer actually exists, for example, by searching online. Don’t take the tenant’s word for it – if they are a con man they will be lying.

You should also arrange for a specialist company to do a credit check and reference. There are quite a few companies which do this. If you don’t know a firm, your insurers will be able to recommend someone, or if you belong to a landlord association, they may have a special deal you can take advantage of.

Checking if they have the right to rent

Under the Immigration Act 2014, with effect from 1 February 2016, all landlords managing rented property in England must check that all prospective occupiers of the property (i.e. NOT just the tenants) have the right to reside in England & Wales.

It is important that you check everyone who is going to live in the property AND keep a record of the check, so you can prove that it was done if you are called to do so by the Home Office. The penalties for non-compliance are very substantial.

Always refer the online guidance provided by the Home Office to find out what you need to do. You will find a guide here along with links to other useful pages.

Don’t rely on printed copies of the online guidance as it is updated regularly and you need to have seen the most recent version.

There is a helpful article on the Landlord Law Blog which provides more information. It was written in 2016 but has been updated since.

You can, if you do not want to do it, pass this work on to your agents, but make sure that there is a written agreement confirming this or you could still be fined if they got things wrong.

There are also now certified identity service providers (ISPs) which you can use – read about these here, plus you can now check someone’s right to rent by checking their share code.

If you use an agent to source tenants

Most agents are very careful to vet prospective tenants properly, but sadly this does not always happen. It is sometimes difficult for landlords to check this as agents will often refuse to provide details of the credit reference reports, citing the Data Protection Act.

As the referencing is to protect YOUR position (and as they are your agents and you have paid for them, the references belong to you anyway), this is not really a very good argument. Particularly if you are registered with the ICO.

I would suggest that when you first instruct agents (if you instruct agents) you make it clear that you will want to see ALL references and credit reports on the tenants that they select for your property. If the are worried about data protection they should tell credit reference companies and referees that the information will be passed on to the landlord.

Referencing does not always work

Unfortunately, careful referencing does not always prevent the occasional bad tenant from slipping through.

Then, there are situations that arise after the tenant has moved in. People lose their jobs, get ill and separate from their partners. These all impact on their financial situations and make it hard for them to pay rent. You cannot prevent this, just try to deal with it when it happens.

We talk about this later.